United States Inflation

Overview

Measuring inflation can be a tricky business. While the concept seems simple, a rise in fall of average prices, in practice it is hard to define exactly. For example, the price of the average automobile may have risen over time, but the functionality of automobiles has also changed, so it is not an exact apples to apples comparison. Perhaps the rise in price is more than justified by additional features.

In addition, some measures of inflation are more volatile than others. In an effort to follow the principles of robust statistics, perhaps it is better to focus policy on the least volatile measures of inflations.

Sticky Consumer Price Index

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Sticky Consumer Price Index

Measures the annualized percent change in the flexible price index, which measures prices that change relatively frequently (less food and energy). This meausure can a forerunner of changes in the more stable measures of inflation and also of increased economic activity.

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Flexible Consumer Price Index

Measures the annualized percent change in the flexible price index, which measures prices that change relatively frequently (less food and energy). This meausure can a forerunner of changes in the more stable measures of inflation and also of increased economic activity.

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